The Four Walls

When it comes to personal finance this is the most basic of principles that also has biblical roots.  I've briefly talked about this in the past, but let me give a more thorough introduction to The Four Walls principle.  No matter what circumstances you find yourselves in you ALWAYS maintain your four walls (aka your household)- Food, Shelter, Clothing, Transportation, and Utilities before you do anything else including paying down debt and saving for retirement or anything else.  Often times taking care of these basic necessities is second nature and well within reach.  There are times after a job loss, income reduction, major medical event, death or divorce when even meeting the basics can be difficult.
So what exactly do the basics entail?  Even in these categories there is wide variance with what you actually need and what you have or want.  Food is the most important basic need in sustaining life.  It is the first thing that needs to be taken care of.  I'm not talking about eating out for every meal, buying filet mignon, caviar, and bottled water at the grocery store, or expensive personal care items.  I'm talking basic food staples and personal hygiene products.  Things may be bad enough that you can't afford to eat out at all and you may even need temporary assistance from a church or food bank.  These measures are temporary for a few months or a year but are not a permanent way of life.  Like food, clothing is another basic need.  Obviously this doesn't entail designer jeans and handbags or fancy sneakers.  You may need to shop consignment or thrift stores to meet this basic need.
Shelter, the roof over your head, whether it be an apartment or home that you can afford.  If you have ever been house poor, you know what this feels like.  A good rule of thumb is that you spend no more than 25-30% of your take home pay on shelter.  Anything much more than this is unsustainable long term and puts you at risk of facing foreclosure or eviction.  As hard as it may be, you may have to sell your home, on a short sale if necessary and move somewhere else. This is much better than having the house taken from you later.  Sadly, I have seen families lose nearly everything by trying to stay in a house they cannot afford.
Transportation and utilities are other needs that have a wide range in cost.  Again this boils down to the basics.  Am I starting to sound like a broken record yet?  Unless you use mass transit, you need a vehicle to get to work and back.  Trying to hold on to a car that you can't afford the payment, gas, insurance or maintenance on is stressful and not worth it.  If you need a truck or vehicle that can tow a trailer for work, that doesn't mean you need a brand new one.  When it comes to utilities you need electricity, heat, water and a phone.  Contrary to what your teenager or spouse might think this does not mean a premium $100 cable or satellite package and a $200 cell phone plan with unlimited everything.  The high speed internet might have to go for a while if necessary.  More hard changes may be necessary to keep your family afloat, but they will be temporary.  Obviously I have listed some worst case scenarios.  Above all, when push comes to shove you may need to trim some of these categories.  Whether you are facing a crisis or trying to find money to pay down debt and save, you are the one in charge and must decide what to sacrifice.  What's important to remember is to hold on to what really matters, your spouse and family.  Stuff is just stuff and you can always get another house or car, but your family is irreplaceable.